FTSE 100 technical analysis for 21st July 2023
FTSE 100 Technical Analysis - The FTSE 100 has seen its rally last another day as buoyant mining stocks gave the top index a boost. The FTSE 100 closed 0.8pc higher at 7,646.05. It followed a surge in the fortunes of housebuilding stocks on Wednesday after a bigger-than-expected fall in UK inflation led financial markets to trim their bets on where interest rates could peak.
Asian shares fell on Friday after Tesla and Netflix weighed on U.S. tech shares after their earnings reports, while the dollar and Treasury yields held their gains ahead of an action-packed week that could see the end of the U.S. tightening cycle.
As well as the U.S. Federal Reserve meeting next week, the Bank of Japan will meet amid speculation of imminent policy tweaks. Early on Friday, Japan’s inflation stayed above the central bank’s target of 2% for the 15th straight month in June, but gains matched a median market forecast.
FTSE 100 technical analysis
Bears are having a bit of a go now, and we may well see a dip and rise play out today to end the week. There is likely to be more volatility next week with the US interest rates and the possible halt to rises on them, for the moment anyway.
Initially today I can see a rise towards the 7670 daily resistance level and a test of the key fib and R1 at 7680. As such a short here is worth a gif for a slide down to the 7627 daily pivot, and possibly as low as the first daily support level at 7596, together with S1 at 7592.
If this holds then a bounce back above 7600 would be good and then the bulls will be looking to hold that ahead of the weekend.
Above the 7683 resistance then the next level of note is 7716 where we have R2, and 7740 for the daily resistance level. Not sure we will see that today ahead of the weekend but you never know!
Support wise, below the 7580 key fib would likely see the next daily support at 7534, but again I don't think we will see it get to this extreme either, especially as the 2h chart is looking bullish at the moment, with decent support at 7616 to start with. There is also the 200ema on the daily at 7573 in the mix.
In spite of that bullish overtone we are also just about to test the top of the 20d Raff channel on the daily chart at 7661 as I am writing this, so a slight overshoot of this and then a drop back to start the day could play out.
Talking of the daily chart the 10/25ema has now gone bullish with a cross after the climb this week, and has locked in 7500 as support with the 25ema here. As such, should we get a drop down to test this line in the next few sessions it would likely set up a decent bounce.
Good luck today and have a great weekend.
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